Germany Declares Crypto Gains Tax Free After A Year Even If Coins Are Used For Lending Or Staking

The Finance Ministry of Germany has officially confirmed that the sale of cryptocurrency assets is tax-free after one year even if the coins are used for staking and lending.

Last week, a letter by the German Ministry of Finance read, "This is the first time that there is a nationwide uniform administrative instruction on the subject."

The finance ministry stated that in a hearing that happened last year, one of the most discussed questions was whether the tax-free holding period for crypto lending and staking should be a minimum of 10 years.

"The hearing in the summer of 2021 was an important intermediate step in the preparation of the BMF letter. One of the most intensively discussed questions was whether processes such as lending and staking can lead to an extension of the period within which a private sale of the virtual currency used for this purpose is taxable as a private sale transaction under Section 23 of the Income Tax Act," the letter read.

The letter stated that the so-called 10-year period does not apply to virtual currencies.

Quoting the letter published by the Ministry of Finance, crypto advisor Patrick Hansen explained on Twitter, "The sale of acquired crypto assets will remain tax-free after one year, even if used for staking/lending."

Parliamentary State Secretary Katja Hessel commented: “For individuals, the sale of acquired bitcoin and ether is tax-free after one year. The period is not extended to 10 years even if, for example, bitcoin was previously used for lending or the taxpayer provided ether as a stake for someone else.”

"Of course, the forthcoming official publication of the BMF letter is not the end of our discussion of the subject, but an interim result. The rapid development of the "crypto world" ensures that we do not run out of topics. A supplementary letter on the obligations to cooperate and record is already in progress," Hessel added.